Complaints about car finance commission

On this page you’ll find out how to complain to a financial business if you are unhappy about car finance commission, and how we can help.

You’ll also see:

• the temporary complaint-handling rules for financial businesses introduced by the financial services regulator, the Financial Conduct Authority (FCA), on 11 January 2024
• information about FCA’s proposal to extend the timeframe of its complaint-handling rules on certain motor finance cases 
• how we are progressing cases and what recent court proceedings mean for handling complaints

If your complaint is about another problem with car finance – for example the affordability of the loan or the quality of the goods – see complaints about car finance. 

When you buy a new or used car, you might use a car finance agreement. This might be arranged with the car dealership. The car dealer, or another credit intermediary, may have arranged a finance agreement between you and a finance provider. The finance provider may then pay commission to the car dealer or credit broker.

You may have recently heard about car finance commission in the news.

That’s because in January 2024, the Financial Conduct Authority (FCA) announced it was carrying out a review of 'discretionary commission arrangements’ (DCAs). The FCA said it would set out the next steps by 24 September 2024 once it had completed its review. On 30 July 2024, the FCA announced a proposal to extend the timeframe of its review and the temporary complaint-handling rules for financial businesses to 4 December 2025. 

DCAs are where the finance provider pays the car dealer commission based on the interest rate paid under the car finance agreement, which the car dealer can set or adjust. Often, the higher the interest rate, the more commission the car dealer would receive.

The FCA banned discretionary commission arrangements in January 2021.

There are other types of commission arrangements that car dealers and finance providers may use. Apart from DCAs, they mainly use:

• Fixed rate – finance providers pay a fixed amount of commission to the car dealer, usually a percentage of what is borrowed
• Flat fee – the finance provider pays the car dealer a fee for every finance agreement they process or arrange

You might bring a complaint to us because you believe: 

• you weren’t told the car dealer would receive commission from the finance provider for arranging the finance 
• the way your car finance agreement was arranged wasn’t fair
• the advice, information or recommendation the car dealer gave you was not impartial, because they were influenced by the commission they’d get from the finance provider
• the car dealer didn’t give you the best interest rate available 

In January 2024, the FCA announced it would be reviewing historical discretionary commission arrangements (DCA). If it identifies widespread misconduct, and that consumers have lost out as a result, the FCA said it will consider how best to ensure that consumers receive compensation.

On 30 July 2024, the FCA announced it’s consulting on whether to extend the temporary complaint-handling rules for motor finance cases that involve discretionary commission arrangements. The consultation is open until 28 August 2024 and any new changes to the rules will be announced by 25 September 2024.  We will also say more about this and how it might affect complaints after the consultation has closed.

You can find out more about this on the FCA’s website.

While the FCA conducts its review, you can still make a complaint but the rules for financial businesses handling complaints about discretionary commission arrangements in car finance are different.

The temporary rules in place for complaints

The temporary rules apply to your complaint if:

• you bought a motor vehicle on finance before 28 January 2021. This could be a car, van, campervan, or motorbike, and includes hire purchase agreements, such as ‘personal contract purchases’ 
• the finance provider and car dealer had a discretionary commission arrangement

You will also need to have:

• made a complaint to the car dealer or finance provider between 17 November 2023 and 25 September 2024, or
• received a final response to your complaint from the business between 12 July 2023 and 20 November 2024.

The FCA’s temporary rules won’t apply if you bought the car:

• using car finance on or after 28 January 2021
• under a hire agreement, such as a ‘personal contract hire’
• with another commission model in use, such as flat fee or fixed rate

The business must tell you if your complaint comes under the FCA’s temporary complaint-handling rules. You can still complain to the finance provider or car dealer, but they have more time than usual to respond to complaints. The eight-week time limit for businesses to send a final response has been extended up to a total of 45 weeks.  The FCA is consulting on whether to extend the temporary pause on the eight-week  time-limit to 4 December 2025.

Where the temporary rules apply, you may also have more time to bring your complaint to us once you have received a final response letter from the business. Instead of the usual six months from the date on the final response, you’ll have 15 months if you were sent a final response between 12 July 2023 and 20 November 2024 and it’s related to a DCA.

The FCA is consulting on whether to extend this time limit to 15 months or until 29 July 2026  if you were sent a final response between 12 July 2023 and 29 January 2026 and it’s related to a DCA.

Other time limits may also apply when making a complaint to us.

Our service is free and easy-to-use. 

You don’t need to pay anyone to represent you, for example a lawyer or claims management company (CMC). But if you want to, you can ask a member of your family, a friend or someone else to help you with your complaint. 

1. Before bringing your complaint to us, you should make a formal complaint to the company involved. Talk to your car dealer or finance provider and tell them you are unhappy and want to complain, so that they have the chance to look at what happened and put things right.
2. They should reply with their final response within eight weeks, or up to 45 weeks if your complaint is covered by the FCA’s temporary complaint-handling rules. If they don't – or you’re unhappy with their response – you can complain to us.
3. Send us your complaint. We’ll ask you about some of the things we need to know upfront and help you make sure you’re ready to send us your complaint.
4. Your case will be assigned to a case handler who will get in touch when they start to investigate.
5. To help us consider a complaint fairly, we’ll ask you to provide any information you have, this might include the credit agreement itself – this is sometimes called a ‘hire purchase’ (HP) agreement or ‘personal contract purchase’ (PCP) agreement, and any other information you might have, such as:
   • the ‘initial disclosure document’ (IDD)
   • any pre-contract information
   • adequate explanation documents
   • standard European consumer credit information
   • any other information provided to you by the car dealer
6. We’ll tell you whether we think you’ve been treated unfairly or not and explain how we reached our decision. 

What to expect from us

As well as the FCA’s review, there is ongoing legal action involving complaints about commission arrangements in motor finance that could have an impact on our work on complaints that involve similar issues.

The Court of Appeal heard the appeals in three joined cases at the beginning of July 2024 and we’re waiting to hear on the judgments. We don’t know when we can expect these judgments from the court. So we can’t say how long it will take before we can issue final decisions on complaints that are affected by the court action.

While both the FCA review and court proceedings take place, we’ll continue to accept and investigate complaints. We want to make sure we:

• have the information we need to decide a complaint as soon as it is appropriate to do so
• can identify whether a complaint is likely to be affected by court proceedings
• can issue investigator provisional assessments, and ombudsman final decisions where appropriate, on cases that are not affected by the legal action 

We will update this page with the latest information and add an announcement to our news section. You can read more about the court proceedings mentioned here in a news update we published in May 2024. 

The FCA’s review

The FCA ‘s review is ongoing; it is currently consulting on whether to extend the timeframe of its review until 4 December 2025.

We will also say more about the FCA’s review and how it might affect complaints as soon as we can.

Putting things right

Once we have investigated your complaint, if we decide you’ve been treated unfairly by the financial business, or that the business has made a mistake, we will ask them to put things right.

The exact details of how we’ll ask the business to put things right will depend on the nature of the complaint, and how you lost out. Our general approach is that you should be put back in the position you would have been in if the problem hadn’t happened.

We may also tell them to pay you compensation for any distress or inconvenience  you have suffered.

Car finance complaints on the FCA’s website. 

If you’re a financial business looking for information to help you resolve complaints, read more on handling complaints about car finance commission.